Markets wary as trade war fears re-emerge – as it happened

Investors hope for talks to resolve trade dispute, while new figures on UK housing show better than expected performance in March

Stock markets are having a nervy day, as investors try and come to terms with the current state of the trade dispute between the US and China.

A seemingly conciliatory tweet from President Trump over the weekend gave some grounds for optimism that the tit-for-tat tariffs may not turn into a full blown trade war. But today Trump was back on the attack again, calling the current trade practices “stupid.”

The International Monetary Fund has warned of a demographic timebomb for developed economies such as Britain, the USA and Japan that will require a radical rethink for immigration policies in response.

Identifying a mounting threat to economic growth and the welfare systems of the world’s most advanced countries, the fund said increasing numbers of baby boomers reaching retirement could potentially “overwhelm” these countries.

US markets have recovered some ground after Friday’s losses, on hopes that the trade dispute with China can be resolved through negotiation.

Investors are also hoping that this week’s start of the reporting season, with results due from the likes of JP Morgan Chase and Citigroup, will see some positive news. The recent tax cuts unveiled by Donald Trump, which have been out of the spotlight since the trade row began, should give a boost to corporate earnings.

All the morning’s gains on European stock markets have virtually evaporated, with Germany’s Dax and France’s Cac both flat, and the FTSE 100 down 0.25%.

Wall Street is still expected to open higher, but not as strongly as the futures were suggesting earlier, with the Dow Jones Industrial Average tipped to gain around 180 points.

Markets have come off their best levels after President Trump made another twitter intervention into the current trade dispute with China.

Germany’s Dax is now up 0.55% and France’s Cac has climbed 0.24%. But the FTSE 100 is virtually flat, with mining companies in particular under pressure as the sector is hit by the latest US sanctions on Russian firms.

Chinese president Xi’s speech on Tuesday is likely to be one of the most important events of the week for stock markets, says Craig Erlam, senior market analyst at Oanda:

Whether the [positive market] moves we’re seeing at the start of the week in Asia and Europe – and in US futures – reflect optimism that a solution [to the current trade dispute] will be found or are simply a case of profit taking on Friday’s moves isn’t clear but a speech from Chinese President Xi Jinping scheduled for Tuesday may point towards the former. China has been gradually opening up its markets for a long time now and there is a hope that Tuesday’s speech may contain some commitments that will help kick start negotiations between the world’s two largest economies.

The message from Larry Kudlow and Peter Navarro – White House Senior Economic Advisor and Director of the White House National Trade Council, respectively – in recent days has been that, while US President Donald Trump is willing to embark on tariffs, he is open to negotiations in order to avoid this. This very much supports the view that this is simply a tactic to get China to the negotiating table and perhaps we can start to see less confrontational talk and more willingness to find a diplomatic solution.

Speaking of China, Barclays bank deputy chairman Sir Gerry Grimstone has praised the country’s president Xi Jinping for his “authoritarian” leadership.

Grimstone – who is also chairman of Standard Life Aberdeen – said at the Boao Forum for Asia, that China was “wonderful” for UK business. In a Bloomberg TV interview, he added:

The fact that Xi is prepared to give such strong authoritarian guidance within the context of a market economy is great for companies such as mine.

Well, that didn’t last long. President Trump is on the attack again on Chinese trade:

When a car is sent to the United States from China, there is a Tariff to be paid of 2 1/2%. When a car is sent to China from the United States, there is a Tariff to be paid of 25%. Does that sound like free or fair trade. No, it sounds like STUPID TRADE – going on for years!

It may be generally calm in the markets but not for companies with Russian links.

In the wake of the latest US sanctions on Russian businesses, a number of listed firms have seen their shares come under pressure again.

European markets are managing to hold on to their gains, but the continuing trade tensions between the US and China mean this positivity could prove fleeting, says Joshua Mahony, market analyst at IG:

European markets are in a more optimistic mood today, with the focus shifting towards a more constructive end to the US-China stand-off. However, recent weeks have shown us that volatility is likely to remain a key part of the trading landscape, with daily shifts in tone from US and China driving huge swings in stocks of late.

A relative dearth of major economic releases over the first two days of this week provides greater emphasis on the geopolitical factors that have shaped market sentiment over recent weeks, with North Korea and particularly China likely to remain key going forward. Donald Trump clearly believes that a crisis will be averted by a deal which would allow free trade between the countries and compromise over intellectual property; however the risk of failure to find a resolution is very real for the global economic picture. The fear is that we have two stubborn and headstrong leaders who are unlikely to cave in, with the stand-off growing increasingly fraught as time passes.

Back with the UK house price figures, and here is our report by Julia Kollewe:

House prices strengthened in March to post their biggest monthly gain since August, according to Halifax, the UK’s biggest mortgage lender.

The average price of a UK home rose 1.5% in March to hit £227,871, the highest recorded price. Prices in the three months to March were 2.7% higher than a year earlier, up from the 1.8% annual growth recorded in February.

Related: UK house prices post biggest monthly increase for six months

After February’s freeze, the March thaw brought some relief to the property market – but only just.

The month-on-month jump in average prices shouldn’t be taken as a sudden blooming of pent-up demand.

For a month in which persistent snow kept cars on drives, this is an enormous rebound, albeit that stock shortage is playing a major role in average monthly price volatility.

We actually saw quite a few opportunistic sellers taking advantage of the bad weather last month to steal a march on the competition and market while there were fewer properties being listed.

The report released by the Halifax this morning suggests that the UK housing market is ticking over steadily, with house price growth mainly unchanged on the previous quarter. The month on month increase of 1.5% now suggests an all-time high in terms of average house price, and overall the data would seem to indicate that the market is so far performing to expectations this year, including the annual forecast released by the Halifax for 2018 at the end of last year.

In many respects, a report suggesting that house price growth is mainly unchanged represents a ‘no news is good news’ result for the property market, as given the current challenges of low available stock levels, impending interest rate increases and ongoing Brexit uncertainty, the fact that both activity and values seem to be maintaining a stable trajectory does underline the strength of consumer confidence in bricks and mortar. The fact that prices aren’t increasing at a steeper rate does mean that, hopefully, more First Time Buyers will be able to take advantage of both the raft of competitively priced mortgages which are still available, together with the exemption on Stamp Duty and Land Tax and get onto the housing ladder in the coming months. Elsewhere in the market, for those wanting to trade up to a larger property, the current trend of more sustainable price increases together with better mortgage affordability will, hopefully, enable those who want to move home this year with the right environment to do so.

Here’s a bit of gloom from the eurozone.

Consumer sentiment fell in April for the third month in a row, due to concerns about a possible trade war between the US and China and a slowdown in global growth.

Even though the current situation is still rated as excellent…the prospects for the future have become massively gloomier. The customs disputes, fuelled by US president Donald Trump, are leaving their traces.

Elsewhere in the FCA’s annual business plan, the watchdog says it’s going to be looking closely at high-cost credit this year. Rent-to-own, home credit, catalogue credit and debt management advice is falling into its crosshairs.

The FCA’s renewed focus on high-cost credit comes at a time of booming growth in wider consumer credit, back to levels unseen since the financial crisis. And as interest rates rise. It warns even gradually rising rates could hurt those in high levels of debt.

The City watchdog has outlined plans to significantly increase its spending on Brexit to help smooth the process for financial firms, one of the biggest sectors of the economy that could face disruption.

The Financial Conduct Authority will need about £30m for making changes to the way it governs the work of banks, insurers and asset managers in the City of London, according to its annual business plan published on Monday.

Over in Germany, there has been a boardroom shake-up at the country’s biggest bank. Julia Kollewe reports:

Deutsche Bank, Germany’s biggest lender, has ousted its British chief executive, John Cryan, after years of losses and promoted the co-head of its retail banking arm to the top job.

Following a two-week boardroom battle, Deutsche has appointed Christian Sewing as chief executive with immediate effect. He vowed to take “tough decisions” to return the bank to profitability.

Deutsche Bank shares jump 4% in early trade after sacking CEO John Cryan and replacing him with Christian Sewing. pic.twitter.com/jZR2LxjAPh

Related: Deutsche Bank ousts British CEO after two-week boardroom battle

Here are the recent movements in house prices according to the Halifax:

House prices in the UK rose by 1.5% in March compared to the previous month, according to the Halifax. This was a better than expected result, with analysts forecasting growth of just 0.2%.

This was the fasted increase since August last year, but the Halifax does point out the monthly figures can be volatile. House prices rose by 2.7% in the first three months of the year compared to the same period last year, up from the 1.8% annual growth reported in February.

House prices in the three months to March were largely unchanged compared with the previous quarter. The annual rate of growth continues to be in a narrow range of under 3%; though the average price of £227,871 is a new high.

Activity levels, like house price growth, have softened compared with a year ago. Mortgage approvals are down compared to 12 months ago, whilst home sales have remained flat in the early months of the year. This lack of direction in the housing market is in stark contrast to the continuing strength of the UK jobs market. The unemployment rate is now the joint lowest since 1975 and in the three months to January there were 402,000 more people in work compared to a year earlier.

Investors are also looking to a speech from China’s president Xi on Tuesday, where he is expected to comment on the current trade situation with the US. Let’s hope he also expands on his “friendship” with Donald Trump (as referenced by the US president over the weekend.)

Markets are looking relatively steady ahead of a keynote speech on Tuesday by China’s President Xi. Trade tariffs are expected to be commented on. Oil edges higher whilst dollar is steady, and cryptos see a small rally. https://t.co/cse8TggseU

As expected, European markets have made a steady start to the week on hopes that the trade dispute between the US and China can be resolved before the threatened tariffs kick in.

The FTSE 100 is currently up 0.22% , while Europe’s Stoxx 600 index opened up 0.3%. Germany’s Dax has added 0.5% and France’s Cac has climbed 0.2%.

Wall Street is expected to follow the generally positive mood when US markets open later, with the Dow Jones Industrial Average predicted to rebound by more than 200 points. This would not recover the 572 point drop seen on Friday, but US markets have been so volatile in recent days that it would be no surprise to see the Dow do that during the day.

Earlier there was some weaker than expected trade data from Germany, with imports and exports both down. It is the weakest start to a new year since 2009, says economist Carsten Brzeski at ING Bank, at a time when Trump’s tariff plans could hit the country’s economy:

The latest trade data confirm that the German economy has had a weak start to the new year. Both exports and imports took an unexpected hit in February. Exports dropped by 3.2% month on month (from -0.4% in January), while imports decreased by 1.3% month on month, (from -0.4%). The trade surplus widened somewhat, from 17.3bn euro in January to 18.4bn euro in February.

These days, talking about trade means talking about Trump and tariffs. In Germany, these talks have caused quite some goose bumps. Rightly so. In 2017, the US was Germany’s largest export partner. The bilateral trade surplus amounted to more than 50bn euro, with vehicles and machinery recording the largest bilateral surplus. At the same time, Germany runs a significant trade deficit with the US in agricultural products. The only comforting factor for Germany is that it has a very diversified export sector, particularly in terms of geographic diversification.

Still, even though the current stage of the global trade conflict seems to be limited to China and the US, Germany could become the first prominent victim outside of these two countries. China announced to impose a 25% import tariff on cars produced in the US. This would immediately harm Germany as the single largest car exporting company in the US is in fact a German car manufacturer.

While the prospects for the German export machinery have deteriorated significantly in recent weeks, the present state of the economy gives some reasons for concern. In fact, the entire start to the year 2018 has been a disappointment. Sentiment indicators have started to weaken, albeit from record highs, and industrial data for the first two months showed the weakest performance since 2009. In our view, seasonal effects, the cold winter weather and a flu epidemic were probably the main drivers of this disappointment. At least in the near term, sound fundamentals, low interest rates, record high employment, high capacity utilisation, low inventories and filled order books are strong arguments in favour of a re-acceleration of the economy. However, if anything downside risks for the economy have clearly increased in recent weeks.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It was another wild week on stock markets last week as the rollercoaster ride that is the trade dispute between the US and China continued to unnerve investors.

President Xi and I will always be friends, no matter what happens with our dispute on trade. China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property. Great future for both countries!

Steep declines on Wall Street have been shrugged off in Asian markets overnight and European shares look set for a positive open. US shares had initially held up relatively after President Donald Trump threatened another $100bn in tariffs against China. Few were willing to hold on over the weekend after US Treasury Secretary Steven Mnuchin acknowledged the possibility of a trade war. Trump tweeted over the weekend with respect to China that ‘Taxes will become reciprocal & a deal will be made on intellectual property.’ Trump’s softened stance offers some hope for calm in his trade dispute with China.

European Opening Calls:#FTSE 7204 +0.28%#DAX 12274 +0.26%#CAC 5260 +0.03%#MIB 22972 +0.19%#IBEX 9703 +0.21%

With US earnings season starting this week some decent reports could be the difference between a rebound off these [market] lows, and optimism about future profits or worries as to whether we’ve seen the high water mark for profits growth. Investors will have to look past recent tax changes, as well as market volatility and flatter yield curves to determine what effects these might have on long term profitability.

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Benioff: Every VC in Silicon Valley turned us down

In an interview last month with Julie Bort from Business Insider, Parker Harris and Marc Benioff told the story of how when they first launched the company, they were trying to raise money and nobody would give them a dime. Benioff said he went to every venture capital in Silicon Valley — and was turned down every single time.

This could be a lesson for every startup out there with a vision, who is not able to find conventional financing for your idea. Salesforce found the money, but it took one on one fundraising, rather than the traditional VC route.

The company famously launched in an apartment that Benioff rented, and he put up some of his own money to buy the company’s first computers. Then it was time to go downtown and ask the VCs for money and it did not go well.

“I had to go hat in hand, like I was a high tech beggar, down to Silicon Valley to raise some money…And as I go from venture capitalist to venture capitalist to venture capitalist — and a lot of them are my friends, people I’ve gone to lunch with — and each and every one of them said no,” Benioff said. “Salesforce was never able to raise a single dollar from a venture capitalist,” he added.

He suggested there were a lot of reasons for that including competitors who would call after his meetings and deliberately sabotage him or people who simply didn’t believe in the cloud as a vision of the future of software.

Whatever the reasons, Salesforce was eventually able to raise over $60 million from private individual investors, before going public in 2004. In the context of today’s venture capital environment, it is pretty tough to imagine a guy like Benioff not finding one taker, especially when you consider that he was not exactly an unknown quantity. And still no one would write him a check.

But this wasn’t now. It was in the late 1990s when nobody was thinking about cloud computing and the notion of software on the internet was a distant idea. Benioff was imagining something completely different and not one firm had the vision to see what was coming. Today, Salesforce is a $10 billion company and those folks that turned him down have to be wondering what they were thinking.

“When you start something like Salesforce, you want to surround yourself with people who do believe in you, who do believe you’re going to be successful because you’re going to have a whole bunch of people who are going to tell you that you’re not, Benioff said.

That’s something every entrepreneur should remember.